Wednesday, October 8, 2014

AMERICAN FASCISM

KAREN HUDES

S. Vitali, J.B. Glattfelder, and S. Battiston:

The network of global corporate control <8> Network Control Concentration <8.1> Control of Financial Institutions One meaning of control in the corporate finance literature is the frequency by which a shareholder is able to influence the firm’ strategic decision during the official voting [12]. Differently, in this work, by control we mean how much economic value of companies a shareholder is able to influence. Moreover, we did not limit our focus on the control of a shareholder of a single firm. Instead, we look at the control each shareholder has over its whole portfolio of directly and indirectly owned firms. As a result, the shareholders with a high level of control are those potentially able to impose their decision on many high-value firms. The higher a shareholder’s control is, the higher its power to influence the final decision. In this sense, our notion of control can be related to Weber’s definition of “power”, i.e. the probability of an individual to be able to impose their will despite the opposition of the others [13]

<8.2> Relation to the Rich Club Phenomenon The so-called rich club phenomenon [20, 21] refers to the fact that in some complex networks the nodes with the highest degree tend to be connected among each other. Being based solely on node degree, rich club indices are not suitable for ownership networks, in which indirect and weighted paths matter. Moreover, in order to benchmark the resulting value of rich club indices, it is usually necessary to reshuffle the links in the network. This would be a problem in our network because it would lead to economically unviable ownership networks. Notice, however, that the core of the TNC network could be seen as a generalization of the rich club phenomenon with control in the role of degree. Thus, future work should look into this issue more in depth.

<8.3> Top Control-Holders Ranking This is the first time a ranking of economic actors by global control is presented. Notice that many actors belong to the financial sector (NACE codes starting with 65,66,67) and many of the names are well-known global players. The interest of this ranking is not that it exposes unsuspected powerful players. Instead, it shows that many of the top actors belong to the core. This means that they do not carry out their business in isolation but, on the contrary, they are tied together in an extremely entangled web of control. This finding is extremely important since there was no prior economic theory or empirical evidence regarding whether and how top players are connected. Finally, it should be noted that governments and natural persons are only featured further down in the list.

In the literature on corporate control there is a debate on whether financial institutions really exert the control associated with their ownership shares. On the one hand, they are not supposed to seek an active involvement in the companies’ strategies. However, some works argue that institutional investors, including banks and mutual funds, do exert control to some extent [14, 15, 16, 17]. In particular, the outcome of votes can be influenced by means of informal discussions, in which pro-management votes are used as a bargaining chip (e.g., in exchange of business related “favors” or in negotiating the extension of credit) x . On the contrary, [18] and [19] find that mutual funds, which typically hold large blocks of shares, vote against the management (i.e., in favor of corporate governance proposals) only 33% of the times (in the case of Fidelity Fund). However, they do so in more than 60%, on average, in other 11 cases analysed. These results are suggested to originate mainly from a conflict of interest, where the benefits of providing pension plan management to client corporations outweighs the possible benefits gained from increased shareholder value. However, while some mutual funds are reticent to exercise their power during voting mainly in the US, an activist stance is observed for some smaller funds and when operating outside the US [19]. In any case, in our study US mutual funds represent only a small fraction of all global financial institutions. In general, 49 mutual funds, identified by the NACE code 6714, are among the 737 top power-holders (see main text, Sec. Concentration of Control)

[sidebar: CHINA came to America and so did RUSSIA. There were lots of PERKS for the NATIONALS of China and Russia, and then guess what happened?! The JURISPRUDENCE in the USA noticed that there was this fattening occurring and then guess what is going to be? THERE SHALL BE THE BIGGEST POPPING BUBBLE EVER, yes the Chinese and Russians already gave marching orders and the people of America were being rounded-up, BUT how clear was this TOTALITARIANISM?PLEASE: FASCISM has always been about "WHAT IT IS"! CHINA AND RUSSIA ARE NOW HAVING TO UPGRADE THEIR GOVERNMENTS, WE MUST NOT FAIL THE CONSTITUTIONAL REPUBLIC'S ENLIGHTENMENT!

ALL THE LIEYERS (OBAMAS BOTH, CLINTONS, BOTH, ET AL) NEED TO BE FOUND AS TRAITORS TO THE U.S. CONSTITUTIONAL DUE PROCESS RULE OF LAW!